IOI Corp 4Q Profit Jumps Fivefold Thanks to Higher CPO Prices
25/08/2020The Edge Markets

KUALA LUMPUR (Aug 25): IOI Corp Bhd's net profit for the fourth financial quarter ended June 30, 2020 (4QFY20) leapt to RM238.3 million compared with just RM100,000 for 3QFY20 thanks to higher crude palm oil (CPO) and palm kernel (PK) prices realised in the quarter.

The quarterly net profit was five times higher from RM46.6 million a year ago.

IOI Corp said in its quarterly result announcement that it anticipates the financial performance of its plantation segment in FY21 to be similar to that in FY20, which was a significant improvement from FY19.

Quarterly revenue came in at RM2.04 billion, just slightly higher than RM2.03 billion recorded in 3QFY20, and 17% higher from a year ago at RM1.74 billion.

The group declared a second interim dividend of four sen per share for FY20 ended June 30, 2020. The proposed dividend will be paid on Sep 18.

The group's plantation segment recorded a 117% increase in profit at RM234.2 million during the quarter, compared with RM84.5 million a year ago, on the back of higher CPO and PK prices realised as well as higher fresh fruit bunches (FFB) production.

Its average CPO and PK prices realised for 4QFY20 were RM2,370 per MT and RM1,349 per MT respectively, while FFB production was at 865,503 MT.

For FY20, the group's annual net profit fell 5% to RM600.9 million versus RM631.7 million a year ago, though revenue climbed 5.6% to RM7.8 billion versus RM7.39 billion previously.

Looking ahead, IOI said oil palm crop production is likely to increase gradually from September to November this year while the demand is expected to taper off from the high restocking activity in the major importing countries, supported by festive demand during the Chinese Full Moon Festival and the Diwali celebration in November.

As a result, it added, palm oil prices may decline slightly in the fourth quarter of this year from its current strong level.

"Oil palm crop production for the group is expected to be flat or slightly lower in FY21 due to the aggressive replanting programme carried out in Sabah, offset by the increased crop production from our young Indonesian planting and our associate company, Bumitama Agri Ltd.

"We have been actively implementing mechanisation in our estates and digitisation in our business processes in order to reduce reliance on foreign workers and improve our efficiency in estate operations as well as administrative control," it said.

Shares in IOI ended five sen or 1.11% higher at RM4.55, valuing the company at RM28.51 billion.